According to data compiled by Moneycontrol, Indian startups have laid off over 13,000 employees since the start of this year. Jobillico Image Credits:
Deepak Singh, 29, was sitting on a train on June 27 with his wife, Geeta, travelling from his hometown of Varanasi to New Delhi. Geeta had just been offered a job by a Gurugram-based company, and with Singh teaching online from home for an edtech startup, the couple decided to shift to the National Capital Region.
The couple bought a one-bedroom house near Gurugram and paid about Rs 20 lakh as a down-payment. Singh planned to pay the remaining Rs 40 lakh in two years and had taken a home loan.
It was a sound plan. Singh was earning well, and with Geeta now having a well-paying job, too, the couple was confident of paying back the loan on time.
But sometimes, the best-laid plans go awry. Just minutes after boarding the train, Singh received a Google Meet link from his manager asking him to join immediately. Seeing some of his colleagues were also online on the call, Singh felt a sense of befuddlement and trepidation.
"We are cutting down the workforce as we think some roles have become redundant," said Singh’s manager. "We kindly request all of you to kindly tender your resignations in two days."
Singh had been worried with all the news on edtech companies laying off hundreds of educators in the past few months. But he also felt reassured because he believed his company was comfortably placed, after a large funding round just some months earlier.
"I was completely blank. I was wondering if people would understand my situation if I told them. There are a lot of responsibilities on me, and almost everything I had was taken away in a few minutes. I felt extremely humiliated, "said Singh.
He added that both of them wanted to study further to build their respective careers.
"But now I’m trying to find whatever job I can so that we can sustain ourselves for some time, at least. I am not sure what kind of pressure the bank will put on us if we fail to pay the loan instalments on time. For right now, the question is one of survival, "forget growth," he added.
Singh is not alone. His is a microcosm of the stories of thousands of young professionals who were laid off over online meetings in minutes without any prior notice as many Indian startups looked to slash costs, preserve cash, and survive amid a funding crunch.
According to data compiled by Moneycontrol, Indian startups have laid off over 13,000 employees since the start of this year. While PE-VC funding rose slightly in the first six months of 2022 on-year, average cheque sizes have fallen almost 13 percent, signalling that growth-stage funding has slowed, forcing startups to resort to mass layoffs.
While some employees were forced to resign, others were terminated. Some were freshers, others were experienced, high-salaried professionals. Some were contractual staff whose tenure had not ended, others were permanent employees who had worked for these companies for years.
The common thread is that almost all were caught unawares, forcing them to dip into their savings or lean on other family members to make ends meet.
Moneycontrol spoke to 15 people who were abruptly laid off in the past six months. Others declined to speak, citing the impact on their mental health after being laid off.
Some, like Dev Malik, now spend hours on job portals, desperate to crack the next gig. Malik, who worked at an e-commerce startup, was laid off in May along with more than a hundred of his colleagues.
"When I didn’t have a job in hand, I was very anxious." I spent most of my time on LinkedIn and Naukri. "I was giving at least three to four interviews every day," he said.
Edtech bears the brunt
Another laid-off employee who used to work at an edtech startup, Vivek Das, was fired last week and is now searching for a job.
"There is no point in putting this on LinkedIn now because the platform is full of such posts that say, ‘We were laid off. Just take us into some company, give us some work,’" he said.
Das said other edtech startups see such posts as an advertising opportunity.
"The best they do is just market their own companies by empathising and saying they are hiring," he added.
However, according to him, when job seekers approach them, they say they don't have any vacancies matching the candidate's experience or role. Das said that they are not able to provide a job because most edtech companies in India are suffering in the post-pandemic world.
With physical tuition centres, schools, and colleges opening up as Covid-19 restrictions ease, demand for remote learning and technology-based education services is dropping.
Slowing demand, coupled with a drop in funding from PE and VC firms, has had a domino effect on India's thriving edtech companies including Byju’s, Unacademy and Vedantu, forcing them to fire as many as 6,400 employees, close to half of the total layoffs.
Amid all this, educators and employees who have experience in the edtech sector are having the worst time finding jobs, said Das, who is also an educator.
Candidates who were offered lakhs of rupees as monthly salaries now have to settle for much less.
"My CTC (cost to the company) was high, around Rs 16 lakh per annum. "When there are 3,000-4,000 people who are in search of a job and are willing to work at a CTC of Rs 6 to 10 lakh per annum, why would they hire a person at my salary requirements?" asked 29-year-old Tarun Raj, who was laid off recently.
Raj said recruiters take them for granted as they feel laid-off employees have lost negotiating ground.
"They know we can work for a lower salary and so, forget hikes; they are trying to negotiate a pay that is even lower than what we used to draw," he said.
Kashif Khan, who was laid off last month, now has a job in another organization.
"I have taken a position with a company that offered me a pay cut of 35-40 percent from my previous salary," he said.
The lay-offs come on the back of a year of aggressive hiring by startups and high employee costs as salaries skyrocketed in 2021.
"I am still confident I’ll take up one of these jobs soon, even at a lower salary, and I also have enough savings to survive until I find one," said Raj. "But I feel bad for those whose salaries lie between Rs 4-5 lakh and are the sole bread-winners in their family."
Raj’s colleague, Harish Malhotra, was laid off on the same day. As a fresher, Malhotra had joined three months earlier and was earning Rs 4 to 5 lakh per annum.
"I got an offer from a school yesterday," Malhotra said. "The in-hand salary I’d draw will be much less. I will have to take this up for now as I was not able to save much with my last salary, which was higher than this. But I’ll keep looking for a better-paying job."
Priya Desai, 31, faces a similar situation. She had a monthly in-hand salary of about Rs 56,000 before she was recently laid off. Now, schools are offering her a salary of less than Rs 30,000.
"I don’t want to work for schools at such a low salary." Until I find a good job, I will have to depend on the savings my husband and I have been making for a home loan and our kid’s education, "said Desai.
Many, like Malhotra and Desai, who suddenly lost their jobs, are struggling to pay household bills and are trying to provide for their families.
Laid-off employees are being offered roles that don’t suit their experience level, skills, or location preferences.
"I used to work only five days a week at my old company… Some companies now want me to work for six days a week and nine hours a day. That’s almost 48 more days in a year that we have to work additionally. They are not even compensating for that, forget a CTC hike," said Das. "I have experience in a managerial role… Now, recruiters are offering normal executive roles where my skills are of no use. And they’re not even considering location preferences. I will have to move away from my family for a job I do not even like."
Employees are losing jobs and salaries are plunging as inflation accelerates across the globe thanks to supply-chain constraints due to the war in Europe and intermittent COVID-19 restrictions in countries such as China.
Rising prices are only adding to the predicament of those who have lost jobs. While a few are struggling with day-to-day expenses, others have cut down on additional spending as disposable income declines.
He said that he dropped a plan to buy a car even though he got a job a couple of days after he was asked to go because his day-to-day expenses had risen.
"Petrol-diesel prices have jumped; other things have become expensive. I can certainly see a difference around me. "So I don’t think this is the best time for me to buy a car, which will add to my monthly expenses," said the 26-year-old Solanki.
Priyanka Sur, living in a small town in Gujarat, meanwhile, said she had to start taking a bus to office every day due to rising fuel costs. Sur, 27, is the sole earner in her family of five. While Sur did not lose her job, she had to take a 30 percent pay cut.
"It’s not just petrol cost, it’s also because vegetables, dal (lentils), rice, everything has become expensive and I have a family of four to feed," said Sur.
Dealing with families
The sudden downsizing in startups has affected not just these employees but also their families, especially in India, where there is still a stigma around being laid off.
"I got married recently. With pandemic restrictions easing, we were planning on taking trips together, setting up our home and so on. "All our goals have been put on hold because we don’t have a regular income anymore," said Abhishek Garg, a 28-year-old who was laid off a couple days ago.
"I have not had the courage to tell my parents that I was fired. I am planning to not tell them about this until I find a new job because they might panic and ask us to come back, "said Singh, who moved to the NCR from Varanasi.
Meanwhile, Yogesh Rana, a 24-year-old who was laid off three months ago, said, "My father never wanted me to take up a job at a startup. He told me not to get attracted by the package but look at a more secure career."
After being laid off, Rana moved to New Delhi and is preparing for the Union Public Service Commission exams.
"All the financial burden has come back on my parents, but I really don’t have any choice. I don’t want to take up another job because I was completely devastated by the manner in which my ex-employer laid me off. Months of hard work and loyalty for the company are all gone to waste in minutes, "Rana said."
Rana added that he still loves teaching and if he is not able to crack the exams, he plans to go back home and set up a coaching centre of his own.
Another problem for educators who have been laid off is that most of them don't have a professional degree in education, said Singh.
"They all had a good command of their respective subjects, and hence they decided to start teaching," he added.
However, the gates of most schools are shut for teachers without a degree in education and hence the options are fewer, according to Singh.
"We have to search for local institutes and coaching centres with students moving back to physical classes now," he said.
To stay connected to his students, Singh has started a YouTube channel and plans to start uploading content soon. He has created a Telegram channel that students can join to access study material that he said he will update regularly.
Malik said he was aware that his company had not been in a good state for a long time.
"I started applying for jobs back in February, and by April, I had a tempting offer in my hand from an established startup in the sector. But my manager reassured me that my job was completely secure and I need not leave, "he said."
Malik trusted his manager and rejected the offer.
"Not more than a couple of days later, they sent me an email asking me to resign immediately. I was left with nothing. I approached the other company and even told them I was ready to accept a much lower CTC. But it was too late, "he added.
Darshil Mehta said his ex-employer put him and his colleagues on a performance improvement programme, or PIP, and told them if they failed to achieve the target, they would be laid off.
"Most of us achieved the targets," Mehta said. "In fact, we went over 100 percent. We were still fired. It never made sense to us. What was the point of the PIP then? "
Samar Roy was promised an additional month's salary along with the days he worked in May after he was laid off in the middle of the month. The company promised him that the amount would be settled soon.
"After almost 45 days of following up, calling them, and mailing them, I was one of the lucky ones who received my notice period salary." "I haven’t yet received payment for the days I worked in May, and the company has already issued the full and final settlement letter," he said.
Most of the laid-off employees have not been paid their notice period salaries, performance-linked incentives, or leave encashment, said Roy. The HR staff have stopped picking up his calls and do not respond to his emails.
Ravindra Rai, who was laid off recently, said the company had promised a severance payment, an additional 15 days’ salary for each completed year at the company, and a performance-based bonus, along with the entire salary for June. The additional salary promised has not yet been credited.
Laid-off employees are also puzzled by their ex-employers' hiring for the same positions from which they were sacked. One such affected employee mused that the company perhaps wanted a candidate for that position for a lower salary.
Many employees are waiting for their final settlements as only that and an experience letter from their previous employer will give them a better chance of getting an offer from other companies.
The silver lining, though, is that many of these employees are getting absorbed into other companies—whether they are startups, IT firms, or even multinational companies expanding in India.
In a recent episode of Moneycontrol Masterclass, TeamLease Services cofounder Rituparna Chakraborty said transitioning affected employees to a new workplace isn’t taking too much time as they have valuable skills.
Advising youngsters navigating the job market, she said, "Drop your standards when on compensation, be flexible on contracts. Just ignore the frills and focus on the learning."
Chandra Sekhar Garisa, CEO at Monster India, added that startups get the quality of hiring right and so the demand for them has been very high.
"I don't think there is any stigma around laid-off talent," he said. "A key concern is the really high salary levels at startups. Compensation correction may happen, but I don't think there is any issue with talent getting absorbed elsewhere. "